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The New High and New Low strategies are “breakout” tools. They assume that if a market can break a multi-day (or multi-bar) ceiling, it has the strength to keep going.
How Logic Works
The strategy looks for the price to exceed the highest or lowest point of a specific look-back period.
- New High (Long Entry): Triggered when the current High is higher than any High within the last n bars.
- New Low (Short Entry): Triggered when the current Low is lower than any Low within the last n bars.
- Execution: Usually enters via a Stop Order at the breakout level.
Key Customizable Inputs
- Length (Default: 20): The look-back period (e.g., a “20-day high”).
Strategic Considerations
- Buy High, Sell Higher: This is the opposite of “buying the dip.” It is a momentum-based approach that bets on trend continuation.
False Breakouts: The primary risk is a “head fake,” where the price briefly makes a new high and then immediately reverses.
